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http://hdl.handle.net/10419/20439
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| Title: | | Deferred Compensation and Gift Exchange : An Experimental Investigation into Multi-Period Labor Markets  |
| Authors: | | Wallace, Brian Seltzer, Andrew J. Huck, Steffen |
| Issue Date: | | 2004 |
| Series/Report no.: | | IZA Discussion paper series 1193 |
| Abstract: | | This paper examines the relationship between firms? wage offers and workers? supply of effort using a three-period experiment. In equilibrium, firms will offer deferred compensation: first period productivity is positive and wages are zero, while third period productivity is zero and wages are positive. The experiment produces strong evidence that deferred compensation increases worker effort; in about 70 percent of cases subjects supplied the optimal effort given the wage offer, and there was a strong effort response to future-period wages. We also find some evidence of gift exchange; worker players increased the effort levels in response to above equilibrium wage offers by a human, but not in response to similar offers by a computer. Finally, we find that firm players who are initially hesitant to defer compensation learn over time that it is beneficial to do so. |
| Subjects: | | deferred compensation pensions experimental labor economics personnel economics gift exchange incentives shirking |
| JEL: | | M51 J41 J31 C91 M52 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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